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TMI Blog2021 (7) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... he abatement mechanism contained in the provisions makes it clear that the legislative intent was for Assessing Officers to proceed only under Section 153A or Section 153C upon receipt of material seized or requisitioned. This special procedure is a derogation from the regular procedure for assessment or reassessment and only some immunity has been carved out for completed assessments. Therefore, the concerned jurisdictional Assessing Officer, upon receipt of material seized or requisitioned, can only proceed under Section 153A or 153C and they cannot proceed with any other pending assessment or proceeding This Court is of an opinion that the scope of Section 147/148 and Section 153A and 153C are not comparable. These two sets of provisions contain different set of procedures as contemplated under the Act. This Court is of an opinion that the scope of Section 147/148 and Section 153A and 153C are not comparable. These two sets of provisions contain different set of procedures as contemplated under the Act. In the present case, the petitioner has raised the point of no jurisdiction and the ground of legal malice. As far as the jurisdiction is concerned, this Court is of an opinion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Thus, the ground of legal malice is not established by the petitioners The authority competent must be allowed to scrutinize the searched and impounded materials and provide an opportunity to the assessee to defend their case. Such an adjudicatory process alone would provide justice to the parties to the lis and therefore, this Court is not inclined to interfere at the stage of show cause notice as far as the present writ petitions are concerned. The factual controversies and intricacies involved are to be adjudicated elaborately for the purpose of culling out the truth and such an adjudication is the dictum of law and thus, this Court has opined that interference at this stage would cause prejudice to the due process of law to be undertaken by the authorities. Thus, the respondents are directed to proceed with the assessment / reassessment by following the procedures as contemplated and by affording opportunity to the petitioners and complete the same as expeditiously as possible. WP dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... to as "DDIT (Inv)"] / the second respondent, at the premises of the buyer M/s.Agni Estates. It is stated that "small note books" were seized and statements were recorded from R.N.Jayaprakash, K.Narayanan and Dhileep Kumar. On 10.08.2018, the Assessing Officer of the petitioner received informations from DDIT (Inv) about the search and seizure operation conducted under Section 132 of the Income Tax Act on 05.07.2018 in the case of M/s.Agni Estates and Foundations Private Limited. Consequently, on 20.08.2018, the Assessing Officer initiated proceedings against the petitioner under Section 148 of the Act and re-opened the assessment for AY 2014-15, with an allegation that a sum of ₹ 6,38,75,000/- (Rupees Six Crore Thirty Eight Lakh and Seventy Five Thousand only) had escaped assessment in AY 2014-15. In response, the petitioner filed a fresh return, reiterating the original return filed by him. Even before the time allowed for filing a fresh return had expired, the DDIT (Inv) filed a compliant on 12.09.2018 in EOC.No.266 of 2018, renumbered as CC No.15 of 2019 before the Special Court, alleging that the petitioner had contravened Section 271C and Section 277 of the Act. The peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner reiterated the request for information that had been sought earlier, but not provided by the Assessing Officer. Challenging the order dated 07.01.2020, passed in Crl.M.P.No.25634 of 2019, the petitioner filed Cr.R.C.No.510 of 2020 before the High Court of Madras on 18.05.2020. The petitioner states that without responding to the requests for information or without holding an enquiry, the Assessing Officer issued the impugned Show Cause Notice dated 21.10.2020, directing the petitioner to show cause why a sum of ₹ 6,38,75,000/- should not be brought to the tax in AY 2014-15 and AY 2015-16. 6. On 03.11.2020, the petitioner filed the present writ petitions, praying for various reliefs including the prayers to quash the Impugned First Notices dated 16.12.2019 and the Impugned Show Cause Notice dated 21.10.2020 for the Assessment Years AY 2014-15 and AY 2015-16. 7. This Court passed an interim order on 07.12.2020, directing the respondents to file their counter affidavits. This Court directed the petitioner to file reply to the Show Cause Notice without prejudice to the contentions in these writ petitions and an order of Status quo as existing on that day was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 05.07.2018 till 09.07.2018. Certain evidences were procured in the form on small note books numbered from 1 to 175 seized vide Annexure ANN/ARS/AP/B&D/S-1 during the search conducted under Section 132 in the premises of M/s.Agni Estates and Foundations Private Limited. Pursuant to the search, the second respondent communicated information relating to the search to the third respondent. It was intimated that the writ petitioner had arranged for cash payments in addition to the sale consideration in respect of the aforesaid three sale deeds. 11. The second respondent, who was the officer, who conducted the search, vide two communications on 10.08.2018 and 20.08.2018, intimated the aforesaid communication to the third respondent. The third respondent had, based on the information so received, issued a notice dated 20.08.2018 under Section 148 of the Act, stating that he has "reasons to believe" that income had escaped assessment within the meaning of Section 147. Subsequently, the seized materials were received by the third respondent i.e., the Assessing Officer having jurisdiction over the searched person i.e., M/s.Agni Estates and Foundations Private Limited on 22.08.2019. On 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 153B, the time limit was 30.09.2020 (at that time) which has been subsequently extended owing to the pandemic until 30.06.2021. (e) The same materials allegedly seized during the search of the buyer's premises, the Assessing Officer has three mutually contradictory cases: (i) that the alleged 'on money' of ₹ 6,38,75,000/- should be taxed in AY 2014-15; (ii) that the alleged 'on money' of ₹ 6,38,75,000/- should be taxed in two Assessment Years, AY 2014-15 and AY 2015-16; (iii) that the alleged 'on money' of ₹ 6,38,75,000/- should be taxed in AY 2014-15 and further, a total sum of ₹ 3,20,00,000/- (part of ₹ 6,38,75,000/-) should be taxed in four Assessment Years, namely, AY 2015-16, AY 2017-18, AY 2018-19, and AY 2019-20. An Assessing Officer has no jurisdiction to issue multiple notices containing contradictory cases and ask the noticee to answer them. A notice to show cause cannot be vague or contain contradictory allegations. The assessee will not know what is the allegation / case that he has to answer. Thus, the proceedings will be in violation of the Principles of Natural Justice. ARGUMENTS ON BEHALF O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel reiterated that the search and seizer materials were very well within the knowledge of the Assessing Officer. Based on the said materials and informations, notice under Section 148 of the Act was issued, stating that the Assessing Officer has "reason to believe" that the income chargeable to tax for the AY 2014-15 has escaped assessment. The reasons for re-opening of assessment was furnished on 12.10.2018 and the attention of this Court is drawn with reference to the remarks of the Additional Commissioner of Income tax on the reasons recorded by the Assessing Officer is relied upon, wherein it is stated that it is a fit case for issue of notice under Section 148 on the reason that "information in the possession of the "AO" reveals that the assessee had received 'on money' payment in cash over and above the registered value, which was not disclosed in the "ROI" filed or during the course of 143(3) proceedings. It is a failure on the part of the assessee in not disclosing fully and truly all material facts which has a bearing on the taxable income of the assessee. Hence, it is a fit case for re-opening under Section 148. Therefore, on the date of re-opening i.e., Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials, further actions were taken, forwarded for completion of proceedings under Section 147 of the Act, but suddenly, the Assessing Officer cannot turn around and switch over to Section 153C for continuation of the reassessment proceedings beyond the expiry date i.e., 31.12.2019. The action results in clutching of jurisdiction and is impermissible. 19. The very intention and the manner in which the impugned notices issued are self-evident that the action was without jurisdiction and is a classic case of legal malice. 20. The learned Senior counsel for the petitioners reiterated that the impugned notices are issued to extend the period of limitation, more specifically, in the absence of any tangible materials. The materials relied upon for initiation of 148 proceedings and the materials from which, the "Satisfaction Note" is prepared with the Assessing Officer for issuing the impugned notices under Section 153C of the Act are one and the same and thus, the Assessing Officer to cover up his misdeeds converted the proceedings, which amounts to legal malice. Thus, the impugned notices are issued beyond the scope of jurisdiction under the Act. The mandatory requirements as cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons. In the present case we can find no reason for which relief should be refused. 29. We have therefore come to the conclusion that the Company was entitled to an order directing the Income Tax Officer not to take any action on the basis of the three impugned notices. 30. We are informed that assessment orders were in fact made on March 25, 1952, by the Income Tax Officer in the proceedings started on the basis of these impugned notices. This was done with the permission of the learned Judge before whom the petition under Article 226 was pending, on the distinct understanding that these orders would be without prejudice to the contentions of the parties on the several questions raised in the petition and without prejudice to the orders that may ultimately be passed by the Court. The fact that the assessment orders have already been made does not therefore affect the Company's right to obtain relief under Article 226. In view however of the fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field. 19. Another Constitution Bench decision in Calcutta Discount Co. Ltd. v. ITO, Companies Distt. I [AIR 1961 SC 372 : (1961) 41 ITR 191] laid down: "Though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts will issue appropriate orders or directions to prevent such consequences. Writ of certiorari and prohibition can issue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raise a demand for payment of further taxes. Accepting the income as disclosed in the return of income furnished by the assessee, it must refund to the assessee any tax paid in excess of the liability incurred by him on the basis of income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. In other words, the tax paid by the assessee must be accepted as it is, and in the event of the tax paid being in excess of the tax liability duly computed on the basis of return furnished and the rates applicable, the excess shall be refunded to the assessee, since its retention may offend Article 265 of the Constitution. 36. We cannot lose sight of the fact that the failure or inability of the Revenue to frame a fresh assessment should not place the assessee in a more disadvantageous position than in what he would have been if a fresh assessment was made. In a case where an assessee chooses to deposit by way of abundant caution advance tax or self-assessment tax which is in excess of his liability on the basis of return furnished or there is any arithmetical error or inaccu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and for payment of further taxes. The Hon'ble Supreme Court of India barred the fresh assessment in the said case on the principles that it was a case of deemed acceptance of return of income furnished by the assessee. Similarly, in the present case, 148 proceedings initiated was allowed to be lapsed and consequently, the original assessment order issued under Section 143(3) became final and to be construed as deemed acceptance of return of income. Thus, any fresh assessment or reassessment under Section 153C of the Act is barred with reference to the principles settled. Admittedly, in the present case, the assessment was made in accordance with law and by following the procedures contemplated. After scrutiny assessment, the return of income was admitted and final assessment order was passed and tax paid. Thus, the assessment became final and any further action must be strictly in accordance with the provisions contemplated. However, in the present case, 147 proceedings were initiated, 148 notice was issued, but the Assessing Officer allowed the proceedings to lapse by not pursuing the action for a longer period and knowing the fact that time limit would expire on 31.12.2019, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the claim of depreciation. Further, the issue was additional income attributable to the business in cinematographic films. 21. It is not in dispute that the reasons for reopening of the assessment under Section 147 of the Act are more or less on the same grounds viz., the claim of depreciation on cinematographic films and income from lease rentals etc. In Ramballah Gupta v. ACIT (supra), it was held by the Madhya Pradesh High Court, that once a search was undertaken and a notice under Section 153A issued, then the question of issuing notice thereafter under Section 148 of the Act on the strength of the same material collected during the search did not arise. 25. In the facts and circumstances of the present case, the Court is satisfied that reopening of the assessment for AYs 1994-95 to 1996-97 by the impugned notices dated 31st May 2001 under Section 148 of the Act during the pendency of the block assessment proceeding was impermissible in law. Having initiated the proceeding under Section 158BC for the block assessment, there was no justification to issue the aforementioned notice under Section 147 of the Act as that would undoubtedly result in parallel proceedings. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view that rectification of the Assessment Order was not called for. 12. However, the same officer issued the impugned notice dated 28th August, 2003 under section 148 of the I.T. Act for reassessment of income for the year in question under section 147 of the said Act, and called upon the petitioner to file a revised return. The impugned notice does not disclose the reasons for the belief that income had escaped assessment. 34. It is patently clear that assessment has been sought to be reopened on the basis of the same materials, on change of opinion. From the reasons, it is apparent that there were no new materials before the Assessing Officer wherefrom it could be deduced that the sum of ₹ 194.61 lacs, claimed as deduction or any part thereof was realized from customers. 39. As argued on behalf of the respondents, the Assessing Officer has jurisdiction under section 148 of the I.T. Act to issue notice of reassessment, upon reason to believe that, any income chargeable to tax has escaped assessment. 41. The Assessing Officer has not disclosed the reasons for the Assessing Officer to still believe that income that was the subject matter of rectification had still ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to be satisfied. Emperor v. Shibnath Bannerji[AIR 1943 FC 75 : 1944 FCR 1 : 45 Cri LJ 341] is a case in point. Then there may be a case where the power is exercised dishonestly or for an improper purpose : such a case would also negative the existence of satisfaction on the part of the authority. The existence of "improper purpose", that is, a purpose not contemplated by the statute, has been recognised as an independent ground of control in several decided cases. The satisfaction, moreover, must be a satisfaction of the authority itself, and therefore, if, in exercising the power, the authority has acted under the dictation of another body as the Commissioner of Police did in Commissioner of Police v. Gordhandas Bhanji [AIR 1952 SC 16 : 1952 SCR 135] and the officer of the Ministry of Labour and National Service did in Simms Motor Units Ltd. v. Minister of Labour and National Service [(1946) 2 All ER 201] the exercise of the power would be bad and so also would the exercise of the power be vitiated where the authority has disabled itself from applying its mind to the facts of each individual case by selfcreated rules of policy or in any other manner. The satisfaction said to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... malice is not legicidal. The action is bad where the true object is to reach an end different from the one for which the power is entrusted, goaded by extraneous considerations, good or bad, but irrelevant to the entrustment. When the custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested the court calls it a colourable exercise and is undeceived by illusion. In a broad, blurred sense, Benjamin Disraeli was not off the mark even in law when he stated: "I repeat . . . that all power is a trust - that we are accountable for its exercise - that, from the people, and for the people, all springs, and all must exist". Fraud on power voids the order if it is not exercised bona fide for the end designed. Fraud in this context is not equal to moral turpitude and embraces all cases in which the action impugned is to effect some object which is beyond the purpose and intent of the power, whether this be malice-laden or even benign. If the purpose is corrupt the resultant act is bad. If considerations, foreign to the scope of the power or extraneous to the statute, enter the verdict or impel the action, mala fides or fraud on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of UMC Technologies Private Limited Vs. Food Corporation of India and another, reported in (2021) 2 SCC 551, the Apex Court referred the said Nasir Ahmad case (cited supra) and held that if these conditions are not satisfied, the person cannot be said to have been granted any reasonable opportunity of being heard. 39. Importantly, the case of Commissioner of Income Tax-III, Pune. Vs. Sinhgad Technical Education Society, reported in (2018) 11 SCC 490, the Hon'ble Supreme Court of India laid down the principles, which reads as under: "14. At the outset, it needs to be highlighted that the assessment order passed by the AO on 7-8-2008 covered eight assessment years i.e. Assessment Year 1999-2000 to Assessment Year 2006-07. As noted above, insofar as Assessment Year 1999-2000 is concerned, same was covered under Section 147 of the Act which means in respect of that year, there were re-assessment proceedings. Insofar as Assessment Year 2006-07 is concerned, it was fresh assessment under Section 143(3) of the Act. Thus, insofar as assessment under Section 153-C read with Section 143(3) of the Act is concerned, it was in respect of Assessment Years 2000-01 to 2005-06. Out of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent that notice in respect of Assessment Years 2000-01 and 2001-02 was timebarred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy." 40. The learned Senior counsel relying on the said judgment, contended that as per the provisions of Section 153C of the Act, incriminating material, which were seized pertain to the assessment years in question and it is an undisputed fact that the documents, which were seized, did not establish any co-relation, document wise, with these 4 Assessment Years. In the present case, there was no incriminating material, which was seized, had to pertain to the Assessment Years in question. The search and seizure materials made available to the Assessing Officer on 10.08.2018 was acted upon and 148 proceedings were initiated with reference to the AY 2014-15. Thus, the issuance of the impugned Show Cause Notice under Section 153C of the Act for the AY 2015-16 has no relevance and there is no co-relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 6,38,75,000/-, which tallied with the statement of Mr.R.N.Jayaprakash, Director of M/s.Agni Estate & Foundation Private Limited. 43. The above reasons furnished for re-opening of assessment under Section 147 of the Act would reveal that not only the information regarding the search and seizure operation, materials are made available to the Assessing Officer, but the Excel sheets as well as the Hard Disk and the other Electronic devices shared by the Enforcement Directorate with Investigation Wing were also made available to the Assessing Officer. Thus, it is apparently clear that the Assessing Officer was in possession of all the materials relating to the Search and seizure operations conducted on 05.07.2018 including the informations and materials. Thus, the actions initiated, if at all, must be concluded before the period of limitation as contemplated and in the present case, 31.12.2019. When the Assessing Officer could not able to complete the reassessment proceedings within the time limit prescribed, the original assessment order became final. Thereafter, based on the very same materials and relying on the informations made available vide letter dated 10.08.2018, estopped f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Society (cited supra), said that as per the provisions of Section 153C of the Act, incriminating material, which was seized had to pertain to the assessment years in question and it is an undisputed fact that the documents, which were seized did not establish any co-relation, document-wise, with these four assessment years. It is contended that the above principles would squarely apply with reference to the facts of the writs on hand. With reference to the AY 2016-17, AY 2017- 18 and AY 2018-19. There is no material available on record and admittedly, the entire sale transaction took place during the Financial Year 2013-14 and the AY is 2014-15. With reference to the said AY 2014-15, 148 proceedings were initiated for re-opening of assessment and the said proceedings was allowed to be lapsed. Thus, there is no material or informations for the purpose of issuing impugned Show Cause Notice under Section 153C of the Act. 48. The learned Senior counsel for petitioner, Mr.AR.L.Sundaresan representing W.P.Nos.16710, 16716, 16719, 16758, 16760 and 16764 of 2020, contended that in the case of the petitioner in the above writ petitions, Smt.Srinidhi Karti Chidambaram, wife of Karti Palania ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, the abatement clause invoked by the respondents are nothing, but the colourable exercise of power, in order to cover up the misdeeds and therefore, the entire actions are motivated and amounts to legal malice. 51. The learned Senior counsel for the petitioner relied on the "Satisfaction note" and contended that the "Satisfaction note" refers to the same materials, which was in possession of the Assessing Officer at the time of re-opening of assessment under Section 148 of the Act. The amount stated in the "Satisfaction note" resulted in issuance of the impugned Show Cause Notice under Section 153C reveals that the materials for initiation of 147 proceedings and issuance of 153C impugned Show Cause Notice are one and the same. In view of all these reasons, the impugned Show Cause Notices are liable to be set aside. ARGUMENTS ON BEHALF OF THE RESPONDENTS 52. The learned Additional Solicitor General of India persuaded this Court to look into the conduct of the assessee in all the writ petitions. The materials and its availability on various occasions during different period of time are distinguished and contended that there was absolutely no legal malice or otherwise on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e writ petitioner had arranged for cash payments in addition to the sale consideration in respect of the aforesaid three sale deeds. 54. The second respondent, who was the officer, who conducted the search, vide two communications on 10.08.2018 and 20.08.2018, intimating the aforesaid communication to the third respondent. The third respondent had, based on the information so received, issued a notice dated 20.08.2018 under Section 148 of the Income Tax Act, stating that he "has reasons to believe" that income had escaped assessment within the meaning of Section 147. Subsequently, the seized material was received by the third respondent i.e., the Assessing Officer having jurisdiction over the searched person i.e., M/s.Agni Estates and Foundations Private Limited on 22.08.2019. On 28.11.2019, satisfaction was recorded and show cause notice was issued on 16.12.2019 in the case of the petitioner for assessment under Section 153C. The case involves two distinct and separate assessments/reassessments. The proceedings initiated was reassessment proceedings under Section 147/148 of the Act for AY 2014-15 and the proceedings for Search assessment under Section 153C for AY 2013-14 to AY 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e per acre. This exactly the informations received by the Enforcement Wing i.e., the Enforcement Directorate, which resulted in initiation of re-opening proceedings under Section 148 of the Act. In view of this reason, the Assessing Officer has "reason to believe" that there was a failure on the part of the assessee in not disclosing fully and truly all material facts necessary for completion of assessment. Thus, there was no error or lack of jurisdiction, for initiation of 147 proceedings. 58. The learned Additional Solicitor General of India distinguishing the reasons furnished for re-opening proceedings, drawn the attention of this Court with reference to the "Satisfaction Note" enumerated in proceedings dated 6th January 2020, furnishing of the reasons and copies of the materials relied upon to the assessee. A satisfaction note along with seized materials and copies of sworn statements were received from the Assessing Officer of M/s.Agni Estates and Foundation Private Limited (AAACA7990C), DCIT, Central Circle-2(1) in the case of Shri.Karti Palaniappan Chidambaram (AAAPC54881) regarding receipt of on-money on the sale of immovable property at Muttukadu during the course of sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial Year 2013-14. In this regard, the learned Additional Solicitor General drawn the attention with reference to the "Satisfaction Note" again, wherein Answer to Question No.16 asked with Mr.K.Narayanan, Accountant and Cashier of Flame Advertising company Private Limited of Agni Groups. 61. The said Mr.Narayanan deposed that there are regular cash payment entries made to Shri.Karti Chidambaram. He confirms that there are regular cash payments made to Shri.Karti Chidambaram and the details of the same were noted down by him as seen from his answers to Question Nos.11,12 & 13 and also from the notebooks numbered from 1 to 175 seized vide annexure ANN/ARS/AP/B&D/S-1, during the course of search proceedings under Section 132 at Agni Plots, Old No:30, New No.16, Conran Smith Road, Gopalapuram, Chennai on 05.07.2018. The details regarding payment of cash on various dates in favour of Mr.Karti Chidambaram pursuant to the directions of Mr.Jayaprakash, MD of Agni Group of institutions were also relied on by the respondents in order to contend that the "Satisfaction note" complies with the requirements of Section 153C and there were materials on record to initiate assessment/reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these materials, the Show Cause Notices under Section 153C of the Act was issued. Thus, there is no violation of Principles of Natural Justice. The authorities applied their mind carefully with reference to the facts and circumstances and therefore, the writ petitions are devoid of merits. 64. In respect of the Show Cause Notices issued for various Assessment Years from the Assessment Year AY 2014-15 to AY 2018-19, the learned Additional Solicitor General of India reiterated that the cash components were paid to Mr.Karti Chidambaram from 07.10.2014 to 30.06.2018 on various dates, covering all the above mentioned Assessment Years. The Sale deeds were executed on 31.01.2014 and on 27.03.2014 and the date of cash payment would reveal that the cash payments were made till 30.06.2018. 65. However, the Income Tax Department may not know, whether such cash payments are paid in continuation of the sale transactions, which were completed in the year 2014 or for any other purposes. The respondents have not taken a final decision with reference to the reasons for making such cash payments by M/s.Agni Estates to the petitioners. However, they received informations and the materials were avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir replies to the impugned Show Cause Notice before the respondent without prejudice to the contentions in their case. Thus, the subsequent Show Cause Notice dated 18.03.2021, providing the particulars regarding various Assessment Years are not in violation of the interim order passed by this Court and the respondents have not proceeded further and awaiting for the orders of this Court in these writ petitions. 68. The learned Additional Solicitor General of India referred the order dated 17.03.2021 passed by the High Court of Madras in W.P.No.35076 of 2019 & etc., batch filed by M/s.Agni Estates & Foundations Private Limited, challenging the Notice dated 01.11.2019. The said impugned notice was issued under Section 153A of the Income Tax Act. Section 153A was invoked as the search was conducted in the premises of M/s.Agni Estates and Foundations Private Limited. In the said judgment, this Court made the following observations in Paragraphs 7, 8 and 26: "7. In a common counter affidavit filed in W.P.Nos.35076, 35082, 35084, 35086, 35088 & 35090 of 2019, all of which are filed by the company and challenge notices issued in terms of Section 153A of the Act, the Deputy Director of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... runs as follows: "153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) Issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed income would be brought to tax. 20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens. The timelimit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included, but in cases where the assessment or reassessment proceedings have already been completed and assessment orders have been passed determining the assessee's total income and such orders are subsisting at the time when the search or the requisition is made, there is no question of any abatement since no proceedings are pending. In this latter situation, the Assessing Officer will reopen the assessments or reassessments already made (without having the need to follow the strict provisions or complying with the strict conditions of Sections 147, 148 and 151) and determine the total income of the assessee. Such determination in the orders passed under Section 153A would be similar to the orders passed in any reassessment, where the total income determined in the original assessment order and the income that escaped assessment are clubbed together and assessed as the total income. In such a case, to reiterate, there is no question of any abatement of the earlier proceedings for the simple reason that no proceedings for assessment or reassessment were pending since they had already culminated in assessment or reassessment orders when the search was initiated or the requisiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through these writ petitions under Article 226, when he could have instead followed the statutory appeal process. The instant writ petition involves complicated question of law and fact and therefore, the exercise of extraordinary writ jurisdiction at this stage may not be appropriate. The agitation of the petitioner that only the Assessment Years to which the seized material has any direct nexus must be reopened and other Assessment Years must be quashed ought to be agitated before the Appellate Forum under the Act against the Final assessment order passed by the Assessing Officer. Such a remedy ought not to be granted at this stage by quashing the notice without allowing the Assessing Officer to make a final factual determination. 74. It is contended that the Reassessment proceedings under Section 147/148 was based on information provided pursuant to the search conducted in the premises of M/s.Agni Estates and Foundations Private Limited between 05.07.2018 till 09.07.2018. The information was received by the Assessing Officer in respect of the search was initiated to the Assessing Officer having jurisdiction over the writ petitioner on 10.08.2020 and 20.08.2020. Pursuant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. Further, the petitioner's representative stated as below: "Also, since the notice under section 148 was issued on 20.08.2018, i.e. FY 2018-19, the time limit for passing the reassessment order under section 153 of the Income Tax Act is 31st December 2019, viz. 9 months from the end of the financial year in which the notice under section 148 was issued. It is therefore requested that you kindly await my client's response to your letter referred to above and not pass any reassessment order until receipt of my client's response" (iii) The petitioner's representative vide letter dated 26.11.2018, stated that, referring to the letter dated 09.11.2018 filed on 12.11.2018 seeking time to peruse the voluminous documents given to his client by the Additional Chief Metropolitan Magistrate, Egmore, Chennai and frame their response, stated as below: "We have received only part Information from court and court hearing is pending for Wednesday 28.11.2018. In view of the above, I request you to defer the said matter by four weeks and oblige." The hearing was adjourned to 17.12.2018 at 11:30 A.M. (iv) The petitioner's representative vide letter dated 17.12.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings before any order being passed without any adverse findings is not factually and legally tenable. Hence, the assertions of the petitioner are deliberate misleading of this writ proceedings before this Hon'ble Court." 76. In view of the fact that the petitioner through his conduct adopted delay tactics by getting frequent adjournments throughout the proceedings and finally on initiation of proceedings under Section 153C of the Act raising a point that the authorities, there was a legal malice. When the petitioner himself contributed for the delay in completion of 148 Proceedings, he is estopped from stating that the respondents contributed for the reasons for delay. 77. The Assessing Officer upon the receipt of the seized material had to open assessment under Section 153C of the Act. There are various rulings of different forums that the Assessing Officer cannot maintain proceedings under Section 147/148 after receipt of seized material pertaining to a search operation under Section 132. The ITAT Delhi in Sushil Gaur & Shelly Agarwal Vs. ITO I.T.A.No.1500/Del/2017 held that proceedings under Section 147/148 were not maintainable upon receipt of seized material pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in cases, where the assessing officer has a "reason to believe" that any income chargeable to tax has escaped any assessment from any assessment year. There is a further caveat given under the 1st Proviso to Section 147, wherein any assessment made under Section 143(3) cannot be reopened after expiry of 4 years from the date of assessment unless it is shown that the assessee did not fully and truly disclose all material facts for his assessment for that assessment year. An assessing Officer may issue a notice under Section 148 in relation to assessments under Section 143(1) or 143(3) or 144 or even in cases, where no return has been filed under Section 139. The key jurisdictional fact necessary for Section 147/148 is that there must be some information, based on which, the Assessing Officer is able to formulate an opinion as to non-disclosure of material facts or that any income chargeable to tax has escaped assessment. There is no requirement that there must be a search conducted or any material seized in pursuance to such search. These provisions broadly contain the procedure for filing returns or making assessment/reassessment in all cases, where there not involving any search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are received by the Assessing Officers, the special procedure laid out under Section 153A or Section 153C shall come into effect. The use of the non-obstante clause coupled with the abatement mechanism contained in the provisions makes it clear that the legislative intent was for Assessing Officers to proceed only under Section 153A or Section 153C upon receipt of material seized or requisitioned. This special procedure is a derogation from the regular procedure for assessment or reassessment and only some immunity has been carved out for completed assessments. Therefore, the concerned jurisdictional Assessing Officer, upon receipt of material seized or requisitioned, can only proceed under Section 153A or 153C and they cannot proceed with any other pending assessment or proceeding. PROCEDURES FOR SEARCH, SEIZURE AND ASSESSMENT / REASSESSMENT UNDER THE INCOME TAX ACT 84. In order to ascertain the jurisdiction for invocation of Section 153C in the present case, it is necessary to understand the procedures contemplated in Chapter XIV of the Income Tax Act. 85. Section 132 of the Act enumerates 'Search and Seizure'. The procedure for search and seizure are elaborately conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer of the searched person (in the present case M/s.Agni Estates), then the Assessing Officer has no option, but to issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years. Thus, the procedures are cogent and after completion of search and seizure within a period of 60 days, (under Section 132(9A), all such materials shall be handed over to the Assessing Officer of the searched person and the Assessing Officer shall issue notice to such person. Issue of notice is mandatory under Section 153A. On receipt of notice, the assessee has to submit return of income in respect of each assessment year falling within six assessment years. Thereafter, under Sub Clause (b) to Section 153A, the Assessing Officer shall assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years. 90. Second Proviso to Section 153A enumerates "that assessment or reassessment, if any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. If the return of income filed on reopening of assessment is found to be true and full, then the authorities would pass reassessment order and determine the tax payable. 93. Beyond these two procedures contemplated for the benefit of the assessees and trusting the conduct of the assessees, the third set of procedures are contemplated, wherein the Department has strong informations regarding the concealment of facts and materials by the assessee, then search operations are conducted. Once search is conducted, then the procedures contemplated are different and thereafter, the assessment and reassessment is to be made only in accordance with Section 153A or Section 153C of the Act, as the case may be. 94. This exactly is the reason why the non-obstante clause is provided under Section 153A (1) and an abatement clause is also contemplated under Second Proviso to Section 153A of the Act. The scope of Section 147 for reopening of assessment is not akin to Section 153A and Section 153C for assessment / reassessment. The assessment / reassessment under Section 153A or 153C is to be done, if any search and seizure is made under Section 132 of the Act. Thus, the scope of Section 153A or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer cannot proceed against the other persons, who are not connected with the search or seizure operations. In order to initiate proceedings to assess or reassess under Section 153C of the Act, the Assessing Officer mandatorily should possess the seized materials and other books of accounts etc., Section 153C unambiguously stipulates that the assets seized or requisitioned shall be "handed over" to the Assessing Officer having jurisdiction over such person. Thus, only after handing over of the materials to the Assessing Officer of the other person, he is empowered to issue notice under Section 153C of the Act and not otherwise. 99. Thus, the scope of Section 147 for reopening of assessment is not comparable with the reassessment proceedings under Section 153C of the Act. On receipt of certain information from the Investigation Wing, though the Assessing Officer in the present case instituted reopening proceedings under Section 147/148 of the Act. On handing over of the seized or requisitioned materials, the Assessing Officer is bound to issue notice under Section 153C of the Act. Reassessment under Section 153C of the Act is wider enough to cover six assessment years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 153C of the Act as there is an abatement clause contemplated under Section 153A and 153C. The very purpose and object of abatement clause is to ensure that on receipt of materials during the interregnum period, more specifically, during the pendency of reopening proceedings, the Assessing Officer, if satisfied, shall issue notice under Section 153C of the Act and proceed for assessment or reassessment. This being the constructive interpretation to be adopted, even in cases, where there is a mistake in initiation of proceedings under Section 147/148 proceedings, on receipt of complete seizure materials, the Assessing Officer is empowered to invoke Section 153C of the Act on satisfaction and by issuing notice. 103. Therefore, initiation of action under Section 153C of the Act would arise only if the seized materials are handed over to the Assessing Officer of such other person, having jurisdiction over the other person. In the present case, admittedly, the search was conducted in the premises of M/s.Agni Estates and Foundation Private Limited. The materials of the searched person was handed over to the assessment officer of the searched person on 28.11.2019. It was forwarded to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Private Limited was recorded. However, in the said letter, there is no mentioning regarding the statements obtained from Mr.S.Dhilip Kumar, Assistant General Manager of M/s.Agni Estates. The letter reveals that the statement was obtained from the Director of M/s.Agni Estates Mr.R.N.Jayaprakash. The Sworn statement recorded under Section 131 of the Income tax Act from Shri.R.N.Jayaprakash is enclosed along with the said letter, which contains questions and answers. Thereafter, the Sworn statement recorded under Section 132(4) of the Act from Shri.K.Narayanan is enclosed along with the letter dated 10.08.2018. In the said statement of Mr.K.Narayanan, Question No.11, Question No.12 and Question No.13 contains snapshots of Page No.17 of notebook No.46, Page No.27 of notebook No.60, Page No.51 of notebook No.69 respectively. 107. The above mentioned snapshots reveal about certain payments made and the details were also furnished in the answers. However, no other particulars are found in the first file, which was the basis for issuing a notice under Section 148 of the Income Tax Act on 20.08.2018. 108. With reference to the next file, the proceedings dated 6t h January, 2020 is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, Balaji Nagar 4th Street, Royapettah, Chennai - 600 014. (j) Item No.10 contains 6 documents from Mr.P.Jenardhan Menon, No.126, F-Block, 6th Street, Anna Nagar East, Chennai - 102. (k) Item No.11 contains 7 documents from Mr.M.Ashok Kumar, No.14/33, Kothari Ornate Apartments, Tana Street, Purasaivakkam, Chennai - 600 007. (l) Item No.12 contains 6 documents from Mr.Sathish Kuamr, No.14/19, Appasamy Street, Pattalam, Chennai - 600 012. (m) Item No.14 contains 10 documents from Agni College of Technology, Old Mahabalipuram Road, Thalambur, Chennai - 600 130. (n) Item No.15 contains 11 documents from Mr.V.Narayanan, No.3G, Mahalakshmi Apartments, 3RD Main Road, Kasturba Nagar, Adyar, Chennai - 600 020. (o) Item No.16 contains 4 documents from Shobana Devi, No.15/8, 3rd Street, Venkatesa Puram, Chennai - 600 012. (p) Item No.19 contains 6 documents from Mr.Sanal Kumar, Flat No.1E, CEEBROS Hariharan Apartments, Lloyd's Road, Royapettah, Chennai - 12. (q) Item No.20 contains 25 documents from Agni Plots, No.30/16, Conron Smith Road, Gopalapuram, Chennai - 600 086. (r) Item No.21 contains 12 documents from Mr.K.L.Narayana, A-3, Sreeshti Srinivasa Vihar, No.161/140, Luz Chur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the requirement for initiation of proceedings under Section 153C of the Act. Thus, in the present case, the initial informations, details and materials communicated to the Assessing Officer made him to initiate 147 proceedings as he "has reason to believe". However, after handing over of the seized materials in entirety in proceedings dated 22.11.2019, the Assessing Officer formed an opinion that it is a case to be proceeded under Section 153C of the Act and accordingly, recorded the "Satisfaction Note" based on the materials in order to proceed further as it is mandatory. In other words, if the seized materials are handed over to the Assessing Officer, then he shall proceed for assessment or reassessment and issue notice, if he is satisfied. Thus, in the present case, "Satisfaction note" was prepared and notice was issued under Section 153C of the Act. Therefore, the informations and materials communicated to the Assessing Officer and the materials in entirety subsequently handed over to the Assessing Officer on 28.11.2019 are different and it cannot be said as identical, though the documents are connected and pertain to the same assessees including the searched person and the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being the factum, conversion of Section 147 proceedings to Section 153C proceedings is impermissible and the theory of abatement propounded by the respondents are not applicable to the facts of this case. The abatement clause must have certain relevance with reference to the facts as well as the sequences of incidents occurred. In the present case, the entire materials relied upon were made available to the Assessing Officer on 10.08.2018. He allowed the longevity of 147 proceedings for several months and finally, woke up and issued the notice under Section 153C, knowing the fact that the time limit is going to expire on 31.12.2019. Such a conduct of the Income Tax officials are not appreciable is the arguments advanced. 117. Per contra, the learned Additional Solicitor General of India rebutted the contentions by stating that the petitioners have blunt the facts in one route and the other aspects and the actual reason for initiation of Section 153C of the Act were not elaborated by the petitioners. 118. In order to repudiate the grounds raised on behalf of the petitioners, the learned Additional Solicitor General of India relied on the "Satisfaction Note", which was communicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 153C of the Act as the Assessing Officer of the petitioner assessee. Hence, all pending proceedings pertaining to the assessment year(s) falling within the period of six assessment years as on 28.11.2019 shall abate. The date of search for the proceedings under Section 153C of the Act in the case of the petitioner assessee is 28.08.2019, on which date, the reopened proceedings under Section 147 of the Act for the AY 2014-15 was pending. Thus, the said proceedings under Section 147 stood abated on initiation of assessment under Section 153C of the Act on 16.12.2019. 120. Admittedly, the informations provided to the Assessing Officer of the petitioner vide letter dated 10.08.2018 and 20.08.2018 contains certain cash payments, spreading over various periods. The petitioners raised a question that even on the day of initiation of 147 proceedings, the Assessing Officer had the knowledge about the alleged information regarding the on cash payments beyond the Assessment Year and in spite of that the Assessing Officer initiated 147 proceedings. This Court is of the considered opinion that admittedly the seized and impounded materials of the searched person was not handed over to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018, made him to act under Section 147 of the Act. But, the seized materials in entirety were not handed over to the Assessing Officer of the petitioner at that point of time. The DDIT (Inv) provided certain informations to the Assessing Officer. But such informations are insufficient to institute action under Section 153C of the Act as the mandatory requirements of handing over of the seized material did not took place on 10.08.2018 or on 20.08.2018. The procedural requirement contemplated under Section 153C of the Act was complied with by handing over of the seized materials to the Assessing Officer of the other person on 28.11.2019 and thereafter, he recorded satisfaction and issued notice on 16.12.2019. Thus, the procedures adopted by the Assessing Officer is to be decided with reference to the procedures contemplated and its purpose and object. Pertinently, for initiation of actions and for its completion, limitations are provided under the Act. Thus, on receipt of information from the DDIT (Inv), the Assessing Officer thought fit to initiate action without prolonging the matter and accordingly, initiated proceedings under 147 of the Act. However, the Assessing Officer was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of time, the Assessing Officer could not able to initiate any action under Section 153C of the Act as the procedure mandates handing over of all seized materials to the Assessing Officer. After handing over and receipt of the entire seized materials, the Assessing Officer could prepare "Satisfaction Note" and initiated Section 153C proceedings. The cogent consideration of facts, circumstances as well as the perusal of original files would reveal that the Assessing Officer has initiated action under Section 147/148 of the Act initially and thereafter on receipt of the entire search and impounded materials, he has prepared a "Satisfaction Note" and issued notice under Section 153C of the Act. The procedural differences between these proceedings are well enumerated in the Act, and established by the respondents through the original files produced before this Court. Certain facts were not available at the initial stage. The complete documents and materials were handed over to the Assessing Officer only on 22.08.2019, after the centralization was done on 06.05.2019. Thereafter, the Assessing Officer prepared the "Satisfaction Note" and issued Show Cause Notice under Section 153C o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with the procedures contemplated under the Act or not and in the event of any error, whether such errors caused any prejudice to the interest of the assessee or not. Rectification of errors are always permissible. However, in the present case, the seized materials were not handed over to the Assessing Officer of the petitioner, as contemplated under Section 153C of the Act. Thus, the informations and materials provided vide letter dated 10.08.2018 and 20.08.2018 are insufficient to proceed under Section 153C of the Act. But, the Assessing Officer initiated Section 147 proceedings. Thus, this Court do not find any procedural irregularity with reference to the actions initiated under Section 147/148 and thereafter, under Section 153C of the Act. 126. No writ against a Show Cause Notice needs to be entertained by the High Court. However, a writ may be entertained, if the Show Cause Notice was issued without jurisdiction or on malafide grounds. Even in case of raising a malafide against any authority, such an authority must be impleaded as party respondent in the writ proceedings in his personal capacity. In the present case, the petitioner has raised the point of no jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the Assessing Officer of M/s.Agni Estates and Foundations Private Limited was received on 28.11.2019 by the third respondent under Section 153C of the Act as the Assessing Officer of the petitioner assessee / other person. 128. The date of search for the proceedings under Section 153C of the Act in the present case, is 28.11.2019, on which date, the reopening proceedings under Section 147 of the Act was pending. Thus, the said proceedings stood abated on initiation of assessment / reassessment proceedings under Section 153C of the Act on 16.12.2019. Under these circumstances, it cannot be construed as a lapse. It stood abated pursuant to the Proviso clause to Section 153C of the Act. Thus, the ground of legal malice is not established by the petitioners. CONCLUSION 129. All these writ petitions are filed, challenging the Show Cause Notices issued under Section 153C of the Act. The procedures for assessment / reassessment are yet to commence. The petitioners are expected to avail the opportunity and defend their case in the manner known to law. The scope of judicial review under Article 226 of the Constitution of India is to scrutinize the processes and procedures through whi ..... 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